Boards Will Never Be Any Good at Policing Executives

The job of the corporate board of directors is to oversee company management on behalf of shareholders. This is, I think it’s fair to say, the most widely accepted understanding of what boards were put on earth to do. Yes, there are those who think the board should be looking out for other stakeholders — employees, customers, society — beyond just the owners of shares. There’s also a lot of evidence that boards aren’t all that great at management oversight. What are board members good for? Well, according to Boivie et al., they provide “access to resources like advice, counsel, knowledge of external events and/or influence with external stakeholders.” They also play a crucial decision-making role during “punctuated events” crises, basically such as management transitions, accounting scandals and “other internal and external shocks that increase the uncertainty in which a firm operates.”